Protecting Your Home from TennCare Estate Recovery: What You Need to Know

If you or a loved one have ever received long-term care through TennCare, it's important to understand how the state of Tennessee can recover costs after a person passes away. This process is known as estate recovery.

What is TennCare? (And How It Connects to Medicaid)

Before diving into estate recovery, let's clear up a common point of confusion: TennCare is Tennessee's Medicaid program.

While Medicaid is a federal program, each state administers its own version under federal guidelines. In Tennessee, that system is called TennCare. When someone says they are on TennCare or on Medicaid, they are talking about the exact same program.

Because TennCare is Medicaid, it must strictly follow federal Medicaid laws regarding:

• Estate recovery
• Long-term care cost recovery
• CHOICES long-term services rules
• The 5-year lookback period
• Asset transfer penalties

How Estate Recovery Works

When someone who received long-term care services (such as nursing home care, assisted living under CHOICES, home-based long-term care, or memory care) after the age of 55 passes away, federal law requires the state to recover those costs.

If the estate — including the family home — goes through probate and the heirs cannot cover the TennCare claim, the state can force the sale of the house to recoup those costs, potentially auctioning off the home to settle the bill.

Can a Revocable Trust Protect Your Home?

Many people set up a revocable living trust assuming it will shield their assets. However, a standard revocable trust does not automatically protect your home from TennCare estate recovery.

When Does a Revocable Trust Become Irrevocable?

A revocable trust typically becomes irrevocable in one of two ways:

• At the death of the grantor: This is the most common scenario ("post-mortem irrevocable trust"). Once the creator of the trust passes away, the trust locks and can no longer be changed.
• By voluntary amendment: The grantor can sign an amendment or restatement stating the trust is now irrevocable, provided they still have legal capacity.

Why Timing is Everything

TennCare estate recovery happens after death — exactly when a revocable trust becomes irrevocable. If the home is still owned by the person at death, even inside a revocable trust, TennCare can recover against it because the transition happened too late.

To actually block TennCare, the trust must be a Medicaid-compliant irrevocable trust established before death.

How to Protect Your Home: Two Main Strategies

By planning ahead, you can ensure your heirs inherit your home rather than watching it be sold off by the state. There are two primary ways to prevent TennCare estate recovery:

1. Medicaid-Compliant Irrevocable Trust (5-Year Lookback)

Simply making a trust irrevocable isn't enough; to block TennCare, it must meet strict Medicaid-planning requirements:

• The grantor cannot be the trustee.
• The grantor cannot access the principal.
• The home must be properly deeded into the trust.
• The trust must feature Medicaid-safe language.

The 5-Year Rule: The trust must be created and funded at least five years before needing TennCare long-term care due to the lookback period. If owned by a compliant irrevocable trust before death, TennCare cannot touch it.

2. Private Long-Term Care Insurance

Another powerful option is purchasing a private long-term care insurance policy. If private insurance covers your long-term care needs, you won't have to rely on TennCare at all. Since TennCare pays nothing, they have no estate recovery claim — keeping your home and assets safe.

Bottom Line

TennCare is Tennessee's Medicaid program. If TennCare pays for your long-term care, estate recovery applies and can put your home at risk. By planning ahead with a properly structured irrevocable trust or private long-term care insurance, you can protect your family's future.

Ready to safeguard your home and explore your options? Call Elaine at 423-367-7585 or schedule an appointment today to go over your options.